I often talk with BPK a lot about investments, and after a bit of a surprise today about whether or not I have to pay management fees for purchasing ETF shares, I figured it would probably be worth it to talk speculation and experience. I see a lot of arguments online about what stocks to buy and professional advice costs money, so why not give it a go here among friends?

I was an economics major in college, so at the time I invested in ego-driven stocks - FUNimation's then parent company and a computer mahjong developer. I had $500 to play with, but I lost almost all of it when both companies effectively imploded. It was only $500, but it hurt looking back that I invested for pretty shallow reasons and got punished for it now.

In March, I pulled the trigger on oil and cashed in my three bank accounts for about $6K investment in a single oil ETF, United States Oil. A few days ago I got worried that I'd have a bill to pay because of "management fees" but that looks subtracted out from any return generated from the sale of oil futures. I thought the ETF was more attractive than a single oil company for the following reasons:

1. Since the near month futures represent up-to-date supply and demand of the entire oil industry, it's a diverse investment within the oil industry in that if Exxon or Shell get slammed for some oil spill or something, the industry at a whole won't be negatively impacted as much as those company's stock.
2. Because I didn't want to pay tax on capital gains (including dividends) as I'm currently trying to lower my tax bracket. Dividends are nice, but I don't have enough capital to just sit on the dividend money
3. I was planning on cashing in during the next recession, as during big recessions oil tends to skyrocket. I did not know at the time that ETFs are considered poor long-term investments, but most of the reasoning I've seen is due to arguably arbitrary cash-in points. Arbitrary only from the market's perspective, more like "when you turn 66". I'm not planning on cashing in because I need the money to buy a car or something, I'm only going to cash in when there's another recession and I can get huge multiples of my principle.

USO was selling at double my purchase price a mere year ago, and I think in a 5 year window it can easily return to that. My major regret was not buying it when it was $16 a share, since I got greedy and didn't realize that $15.85 versus $16 was minuscule compared to a dollar difference that I did purchase it for.

So I've been debating with myself for the past two days about my actions prior to Brexit.

I've obviously been aware of the stock market really leading up to yesterday's Black Friday, so I had the option to sell my stocks and cash in on $3,000 in revenue. I lost $900 in the crash yesterday, but even in retrospect I don't know if I made the right move.

See, because these stocks were purchased this year, I would be taxed at, approximately, 45% rate. That means of that stock only $1950 of it is legit profit. Had I sold short yesterday, I'd have to pay the USFG $1,050 next April.

I've temporarily lost $900, but by not cashing in I don't owe the government anything yet, because I haven't realized any gains.

I have read that the market is expected to rebound fairly quickly. I have also read that the market was artificially inflated this week precisely because the market anticipated a Remain win and that the current stock indices are actually at the same place that they were a week or two ago. In other words, while you may have missed an opportunity to cash in while the going was good, you haven't actually lost any money, i.e. if you're sitting at $2,000 profit now you were most likely sitting at $2,000 profit last week.

It's correct that I haven't lost anything. But since my stocks dived on Friday, I had the option to sell them high on Thursday and immediately buy them back on Friday. This means that the $900 value would have been actualized in owning more stock than I did previously, and if the stock returned to its Thursday price the total value would have been $1800 more than it is right now, with me not selling anything.

My question is that was it really worth it? My stock pays dividend but it's not like I'm living off that - it's more a floor so the stock gains additional value on top of the growth potential. $900 is about the size of one of my paychecks.

The trick is I'm dodging around having to get my tax bracket lowered this year. I'm dumping the maximum number ($18,000) allowed by federal law into my tax-deferred accounts. That should lower my expected income from $50K to $32K, which drops me from the 25% to 15% tax bracket. Without any other additional sources of income, that means the feds will owe me the difference between the 25% limit and 15% limit come next year (about $5,000).

But through my part-time work, overtime and dividends, I've made additional income to counterbalance that. $3,000 from part-time, $150 from dividends, $500 bonus, and lord knows how much OT. The total number will be more clear as I get toward December.

I have a trump card in that I can sell the oil stock mentioned in the OP and write off the depreciation as a loss, but I really don't want to do that unless it's the difference between owning the government money, and being owed money.

Anyway, cashing in the stock felt like small-time gains to me. If I had something like $50,000 invested, sure. That would have been something like $7,000 in gains/losses if I did. But $900 seems like not worth the effort given the sensitive tax conditions.

I've been comparing my investment portfolio against my retirement 401K, and the results are actually a bit depressing!

I would have figured I could outperform even the most ambitious/risky funds with active management. I've hit on almost all my investments but it may not have happened anyway. Let's break it down.

Investment account

Year to date contribution: $17,107
Gains: $5,308 (+31%)

401K

Year to date contribution: $13,167
Gains: $3,628 (+27.5%)

Now, I'm counting agency 1% contribution and 4% agency matching in the "gains" section, alongside actual account growth. There's also some befuddling in that my $8K investment from 2015 is also contributing to the gains in 2016, but I opted to not adjust for that since I'd have to also include my investment account's $2K loss from the oil plunge late last year. Both gains are pre-tax, as I'll have to pay short-term capital gains on my portfolio accumulation.

Point being, I felt I outperformed the market significantly this year, killing it on most of my stock bets and just treading water on the stuff I didn't. I did lose big on oil, but that could recover - oil has to generate a profit of $1322 next year to make up for the losses, although that doesn't take into account opportunity cost.

Ultimately, if you hold multiple jobs, it makes the most sense to dump money into two retirement accounts and not consolidate like so many people seem to want. Otherwise you're missing out on the massive employer contribs which significantly close the gap with what you can do on your own, and are a lot less risky than how I got to a 31% return. It makes even an individual IRA look pathetic in comparison, as unless you with the lottery on stock.

I've been really interested in margin/leveraged actions for the allure of their payout. As another fellow said, this isn't investing, this is more like entertainment/gambling, but you can see the allure:

I purchase 400 shares of stock for 10,000, and they go up $4. At the opening of the first day post-settlement, I sell the shares for $11,600. I then short sell an additional 200 shares of the stock, which drops back to its original price. The profit there is $800.

So basically, I've increased my assets by 20%. Now, actually owning the capital is better in every way, because you're required to maintain a margin balance to hedge against loss. Meaning, you stand more to lose from short selling than you stand to gain. But it's still interesting.

Quote:

Originally Posted by Doppleganger

I see a Limit Order for a company not actually expecting the stock to fall to that price, and it triggered today. I didn't have the balance to cover it. OH SHI-

So I had to emergency sell some stock to cover the cost. Good thing I was keeping an eye on my emails, jeez. If I didn't sell that stock today I think that's a crime.

This stock ended up plummeting! I wish I had emergency sold everything.

I started the year with about $33,000 in assets and I've made about $8,900 YTD, if I cashed in my stocks tomorrow. I still haven't hit one of the "buttons" (a stock which doubles, triples) but this is some pretty good return. Granted, I've not been sitting pretty and dumping further cash into the account, so some of those gains are diluted. The main goal here is to cut expenses, which I aim to do in the coming months. The cool part is that most of my sunk-cost expenses for the year are gone, but I will have to make periodic IRS checks as I start to rake in the cash.

T-Mobile announced they've spent $8B to upgrade their 4G LTE network. By 2019, it should be equal to Verizon's in reach, so the coverage issues will cease to apply to older phones. Meanwhile, Dish Network bought up 5G licenses, which suggests it's positioning itself with a merger with a company.

The most obvious merger is Dish/T-Mobile, as they have comparable market caps, share price is at parity (and because of the combined stock, their share price should cut in half, something to $30 per share and closer to AT&T/Verizon) and Dish is stocking up on the licenses that T-Mobile will want for 5G. Dish will get T-Mobile access to Zero Rate (RIP Net Neutrality) television like NetFlix in the same way AT&T does. T-Mobile has the least depth and most cash on hand to make an acquisition. Deutsche Telekom isn't interested in selling a cash cow that's almost as big, and will surpass its German business.

In the coming months, I would buy Dish stock and sit on it. Had you done so with Straight Path Wireless you would have x3 your investment on Monday. T-Mobile/Sprint makes zero sense now except as an anti-competitive move. From a pure growth POV, TMO purchasing Dish is the most telegraphed move in wireless.

Uuuu....I made a bet on Rite Aid hoping it would get bought out, and basically lost out, with my portfolio suffering a massive 30% drop today. The raw indicator says I dropped ~$17,500. Looks like a disaster?

Well, not really. The truth is I was already made $16,000 from arbitrage to this point in the year. The reason I took the risk instead of sold ahead with the 20% gain I got on Rite Aid yesterday (which would have netted me +$13,000) was because I was hoping for the merger to go through and give me x2 the return. Is it worth losing 30% to gain 100% when you're already playing with house money? I dunno, it was to me because the opportunities are few and far between.

Since I've left my job, my gross for this year has been about $54,000 and I've paid $19,000 taxes on that to this point. That's a 35% tax rate, meaning the federal government owes me roughly $9,000 back next year as a tax return, WITHOUT me taking into account losses and deductions. That's just on the raw gross.

I have an additional $8,400 in tax-deferred wages (which lower your tax bracket) and $5,000 in capital losses (which do not). However, both lower the gross to $41,200 ish. That's still too much for me to receive the biggest tax return (dropping down to the 15% bracket), I still am expecting a +$12,000 tax return next year, based on the federal government refund.

The moral of this story? While my risk adventure didn't work out, I didn't really lose anything, in the long term. I merely suffered from an opportunity cost and my stock is pretty illiquid right now, since if I sold it it would be at a capital loss I don't want to offset.

I've been following the RAD saga the past couple of days and it's been a wild ride. This is almost the right setup for an Amazon takeover... Of course that could only pass regulations if our government were suddenly overrun by a bunch of greedy capitalist dimwits. Hah, like that could ever happen

I'm hoping for a private equity buyout or an Amazon buyout, either way. Private equity nabbed Staples today and Rite Aid is at such a depressed price, it's ripe for the picking as well.

$4 final price would be okay, but disappointing for me though it's not like I had massive opportunity costs on the side. I'm still hoping for $5 or $6, but honestly with Rite Aid divesting its stores, that actually does represent a fundamental change to the company. Arguably for the better (since it'll be able to pay down debt, cut costs, and increase profitability) and the deal with Walgreens will help out. So the long-term prospects are pretty good, even if the short term where I want it isn't.

Granted, if Rite Aid was at $7 a share next year that would still be a net win for me. The more part-time work I do, the less kickback I get from the feds.

They didn't terminate! It's put "on hold" because Qcom didn't cooperate with the investigators. EU's delay tactics only hurt Qcom as long as NXPI continues to rise. If my guess that NXPI is overvalued is true, though, then the delay might give them an opportunity to ride out the bubble and buy NXPI at the original value.

But throughout its 8 year history BTC has ever had upward momentum. That momentum fluctuates, but whereas I used to scoff and laugh at the prospect, I'm becoming convinced cryptocurrency is the future. Checked the prices this morning and I've made an $8 profit since I went to bed last night.

Would it have been smarter to invest in a small, up and coming business that sells minerals and materials? Maybe. But you know, YOLO (this but unironically)

I owned Navarre not for financial sense (it was only worth $50M as a company; FUNimation has sold for three times that this year to Sony) but to brag online that I was an internet big shot and an anime insider. Even though it wasn't true.

Of those two investments, this year I've recovered $0.04 of the $500 invested. Not only did both companies belly up in the subprime mortage crisis, they never came back even after the 10 year bull run.

I think Bitcoin is a more solid investment than what I did, but it's just a warning. While $500 is very little to me now in investment terms at the time, I lost 63% of my net worth, which bothered me a lot, and I swallowed a hard lesson in humility.

It's like that episode in Doug where Doug cashes in a $50 savings bond from his deceased grandmother for a scam. The sentimental value of the gift was lost on him until after it was gone.

I feel the same about selling Shell to invest in Line Corp. Shell was solid even if it wasn't going to gain me much over my lifetime, since my seed money was so small. But I lost the Line Corp bet so now I'm salty.